Modeling Distribution Services and Assessing Their Welfare Effects in a General Equilibrium Framework |
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Authors: | Scott Bradford Alexandre Gohin |
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Institution: | Brigham Young University, Provo, Utah 84602. Tel: 801-422-8358;Fax: 801-422-0194;E-mail: .; 4 allée Adolphe Bobierre CS61103 35011 Rennes, France. Tel: 33 2 23 48 54 06;E-mail: . |
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Abstract: | Most international trade models fail to account for the fact that almost all goods must pass through the distribution sector. The authors compare different approaches to modeling distribution within an Applied General Equilibrium framework and find that such modeling may significantly affect trade opening simulations. They also predict large potential gains from streamlining distribution. For instance, a 10% reduction in Japan's final goods distribution margins would benefit it as much as worldwide free trade would. They also find that, compared to trade opening, reducing margins leads to smaller inter‐sectoral production shifts and thus may engender less political opposition. |
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